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Who can perform a school audit as prescribed by the South African Schools Act?

Published Aug 3, 2022


There has been lots of confusion over who can perform an audit of a school.

Treasurers and Principals need to be aware of the legislation involved when accepting an engagement from a public school.

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No other accounting body other than those registered with the Independent Registered Board of Auditors (IRBA) may audit financial statements.

This key piece of advice comes from Otto Nkosi, Head of External Audit at Kettle Consulting.

He says that an audit may only be done by a registered auditor and conducted in terms of the Audit Professions Act.

“Many times, a school doesn’t have the resources to prepare their own financial statements. If they have appointed a member of another accounting body for this task, the professional must take precautionary measures to address the threat that exists when the client expects them to handle the preparation of the establishment’s financial statement as well as conduct an independent review or audit on those same financial statements,” says Nkosi.

According to the South African Schools Act, the governing body of a public school must draw up annual financial statements in accordance with the guidelines determined by the Member of the Executive Council within three months of the end of each financial year.

Within six months of the end of each financial year, a copy of the annual audited financial statements must be submitted to the heads of the regional education department. This is the guidance from the National Department of Basic Education.

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Unfortunately, the South African Schools Act does not prescribe the accounting framework which needs to be followed for schools, which makes it difficult for auditors to audit the financial statements of the organisation.

While most auditors follow IFRS for schools, it is actually the National Department of Education's responsibility to define which generally accepted accounting practice to follow. Failing to do so, the provincial department should provide guidance, and finally, if not, the SGB may adopt an entity-specific framework.

Implementing IFRS can be extremely difficult for a school to roll out, and a best practice guideline has been issued by the South African Institute of Chartered Accountants to implement at a local level.

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It is important that the management of the school and the auditors agree on the approach adopted upfront in order to avoid the amount of qualifications currently being experienced in the market.

This must be a partnership between both parties in order to ensure that the best possible outcome is achieved.

Nkosi recommends the following beforehand:

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– The school seeks guidance on the framework to be followed before the audit takes place;

– The SGB approves the framework to be used; and

– The auditors confirm in writing the framework used to audit the entity.

The governing body of a public school must appoint a person registered as an auditor in terms of the Audit Professions Act of 2005.

The external audit team at Kettle Consulting can also be contacted to assist with a schools’ 2023 audit. They can be contacted on 011 025 1446 or email at [email protected]